The wife of Downing Street's former chief of staff, Jonathan Powell, has lifted the lid on the private fury felt by Tony Blair's inner circle over the cash-for-peerages inquiry, accusing the police of 'Gestapo tactics'.

In a remarkable intervention, which contrasts with the measured language of the former Prime Minister, Sarah Helm singled out a dawn raid on the former Number 10 aide Ruth Turner as a sign of police heavy-handedness.

Helm, a journalist and author, writes in today's Observer: 'I know one shouldn't make these comparisons, but I was writing about Nazi Germany right then and I couldn't help think: Gestapo tactics! Pick on the vulnerable, preferably a single woman, living alone. No matter that you may have nothing on her that will ultimately stand up in court - give her a scare.'

It was widely known in Whitehall that the raid on Turner deeply upset Blair and Powell. Helm writes: 'As if she were some street criminal, ready to scarper, Ruth's home was swooped upon by [Assistant Commissioner John] Yates's men and she was forced to dress in the presence of a female police officer. Then there was a tip-off to the press.'

Yates, who led the inquiry, has strongly denied any police leaks and insisted that his officers were merely doing their duty. Despite the Crown Prosecution Service's decision not to press charges, he has received public backing for how he ran the investigation from the CPS and Metropolitan Police Commissioner Sir Ian Blair. Sir Ian said on Friday that he had 'always been satisfied' with the way the inquiry was being handled.

Despite their private anger, the former Prime Minister and his inner circle were also careful to avoid expressing public criticism of the 16-month investigation after the CPS announced nobody would be charged.

But Helm's criticism, echoed in angry private comments yesterday by senior Blair allies, will stoke the debate over the conduct of a lengthy inquiry that ended up costing nearly £1m, involved the questioning of dozens of people and four arrests, but produced no charges.

The Commons public administration committee, which suspended its own inquiry into cash-for- honours to allow Yates a free rein, is likely to reopen hearings where he could be questioned.

The committee's Labour chairman, Tony Wright, reacted to the CPS decision by saying the investigation had been a 'disaster for the police and a disaster for the political system'. David Heyes, a member of the committee, said last night: 'I am sure we will resume our hearings some time in the autumn and that Yates will be one key witness.'

Helm, whose husband was questioned for a second time under caution, writes: 'The Ruth episode showed the police were desperate. What on earth would they do next? Was Yates coming here?'

She also criticises media coverage of events. 'At best we saw just sloppy, bad reporting, and at worst, cheap sensation and vindictive lies.'

Despite the anger voiced by Helm, The Observer understands that none of the people interviewed by police will take any legal action over the inquiry. They are intent on concentrating any public criticism on the Scottish National Party, which triggered the investigation with a complaint to the police by the MP Angus McNeil.

Lord Levy, Blair's chief fundraiser, said last night that he wanted to 'draw a line' under the affair and move on - particularly with the wedding of his son, Daniel, due to take place in London next Sunday.

A spokesman for the former Prime Minister told The Observer: 'We don't want to get into criticising the police.' Asked for comment on public criticism of the inquiry by Peter Mandelson, a Blair ally and European Union Trade Commissioner, he said: 'I don't want that to suggest I'm attacking Peter, because I am not. He is entitled to his views. But the decision, as we said in our public statement, was that we want to move on.'

But a former member of Blair's cabinet highlighted the continuing resentment by accusing Scotland Yard of having subjected alleged suspects to months of 'incredible' pressure although it was 'clear' that there was no credible evidence. 'There is anger, of course,' the ex-minister, a close Blair ally, said. 'But the last thing anybody wants is to create a situation of Downing Street against the police, or against John Yates. Let the public bash him.

'Obviously, no one involved in the pressures of the past 16 months wants to do anything, anything at all, that will risk prolonging what they've been through.'

These remarks echoed a series of angry private comments yesterday from Blair's closest political allies. One, accusing the police of heavy-handed tactics and damaging media leaks, described Yates as 'a shit'.

'Everyone who has been at all affected by this investigation will have thought long and hard about what to do now - and be very tempted to take the argument to Yates,' he said. 'But no matter how much anger there is, there is also a desire to put the entire terrible episode behind us.'